INTRODUCTION

Marketing Budget :

A marketing budget is an estimate of projected costs to market your

products or services. A typical marketing budget will take into account
all marketing costs e.g. marketing communications, salaries for
marketing managers, cost of office space etc. However much of the
budget is concerned with marketing communications e.g. public
relations, website, advertising, etc. Both are considered here.

Marketing Cost :

Marketing costs are the all expenses that the company makes to
market and sell its products and develop and promote its brand. These
marketing costs or expenses include expenses incurred to change the
title of goods, promotion of goods, inventory costs, distribution of
goods etc. Marketing costs are generally composed of two factors-
fixed costs and variable costs. The marketing cost is also used to
determine the risk associated with budgets.

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 IMPORTANCE OF MARKETING BUDGET

Allows Exploration :

Digital mediums are so dynamic that if you miss an update you may
end up investing in platforms or tools that are irrelevant to your
business. A budget that has the provision of testing new mediums can
lower the cost of reaching your target audience.

Product Development:

It isn’t surprising that many companies struggle to stay current with

their core offering.Market research is an ignored spend and one that
can change your perception about client needs.Building marketing
channels where your customers can tell you what they really want is a
long-term investment and one that is crucial.Budgeting for surveys,
product feedback, testers and actions that aid product development is
vital to staying relevant every day.

Future Goals:

It is a given that in marketing not everything is measurable. Brand

reputation or mind space captured is an effect of a good marketing plan
but it’s also intangible.But what is measurable, like conversions with a
particular digital ad, should be captured and used for optimizing your
future business plans.Once you start seeing a substantial response from
any of the mediums you will know where to invest next

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Great For Sales:

As a business, it is your job to do everything you can to help your sales

team, even before they approach a client.One way to do this is to
factor-in brand building activities in your marketing strategy.If your
client already has an image of your brand, it can make conversions for
your sales team an easy affair.

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 STEPS OF MARKETING BUDGET

1: Organize Financial Information:

The first step to creating a solid marketing budget is to get organized

about your current financial situation. When you are working around
estimates, it is impossible to create a realistic marketing budget.

2.Determine Where You Want to Spend Marketing Funds:

After you know the total amount available to spend on marketing, the
next part of creating a solid plan is organizing how you intend to spend
that money. Three main factors contribute to how you spend marketing
funds: the budget size, your past experiences, where you can reach the
right audience.

3: Assess Data and Make Appropriate Changes:

The final step of building a solid marketing budget is the analysis of the
plan and adjustments that improve revenue production. Ultimately,
marketing is designed to bring in extra revenue. If the strategy does not
bring in new revenue in excess of the cost, then it is better to remove
that strategy and try something else.

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 CUSTOMER PROFITABILITY ANALYSIS

Customer Profitability Analysis is a tool from managerial accounting

that shifts the focus from product line profitability to individual
customer profitability. Activity Based Costing looks at the various cost
drivers to accurately isolate costs and determine a product’s
profitability. In contrast, Customer Profitability Analysis is a method of
looking at the various activities and expenses incurred in servicing a
particular customer. In other words, it focuses on analyzing profit per
customer rather than profit per product.

SALES BUDGET
Sales budget refers to the estimation of the sales revenue and the sales
overheads for a particular period. A more accurate sales forecast means
better utilization of resources, higher profitability and less wastage.
Sales forecasting, which is nothing but an estimation of demand for
goods or services in the market is essential for preparing a sales budget.

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 SALES BUDGETIG PROCESS

Preparing a sales budget is a step by step process. It involves keen

observation, research, analysis and decision making.

Let us now go through the various stages of preparing a sales budget:

 Decide a Period of Sales Budget: A sales budget can be planned

accurately if a specific period is determined. It can be made
monthly, quarterly or yearly.

 Collect Previous Sales Data: The next step is gathering the sales
data or record for the previous period. It acts as a base to plan a
sales budget for future sales.

 Gather Industry’s Sales Information: The company needs to be

updated with the total sales of the particular industry for a
specific period. It should be aware of its market share and the
expected growth of the industry within that period.

 Compare Sales of Consecutive Period: After collecting the sales

records, a comparative analysis is required of the previous sales
periods to predict the future sales possibilities.

 Study Current Market Trends: Next step is keeping an eye on the

market fluctuations, preference and trend which helps in
determining a more accurate sales budget.

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 Communicate with Customers: The customer reviews and buying
habits should be analyzed to know their buying trends and
intentions for preparing a sales budget.

 Prepare Sales Forecast: Based on the above data and analysis

regarding past sales, market trends and customer’s response,
sales for a particular period is forecast.

 Compare Actual Sales with the Forecast: Finally, the actual

performance or the sales volume is compared with that of the
estimated sales to find out the accuracy of the sales budget. It
provides for taking the corrective measures in future.

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 CONCLUSION

Budgets for marketing costs so proper planning may occur. These

costs include selling, advertising, and distribution. It is better to budget
expenses based on a percentage of budgeted sales rather than on prior
years' sales. What held in the past may not hold in the current year.

A thorough analysis and evaluation of marketing costs should be

made to determine if they are excessive, such as by comparing each
major expense category to sales. Problem areas must be identified and
rectified. In this connection, the marketing manager should assign
specific responsibilities to subordinates, such as salespeople, by
territory or customer.

When sales volume increases, most marketing expenses increase, but

they may not increase in proportion to sales volume. If the increased
sales volume is from larger orders only and from existing customers,
the collection, credit, and delivery costs will not increase in proportion
to sales.